CVI - CVR Energy: Despite Near-Term Headwinds Dividend Capacity Makes Shares Attractive

2024-06-17 11:25:43 ET

Summary

• CVR Energy shares have only gained 6% in the past year and have lost 30% in the past quarter amid concerns about crack spreads.
• Recent financial results were mixed, with lower crack spreads impacting earnings, but CVI remains strongly cash generative.
• The refining macro has deteriorated, but may be bottoming out, with the potential for a rebound in crack spreads and demand.

Shares of CVR Energy, Inc. ( CVI ) have been a modest performer over the past year, gaining just 6%. This performance though has deteriorated over the past quarter with shares losing about 30% from their recent high, amid concerns about the refining cycle. I last covered CVI in March , reiterating shares as a "buy" given my long-term optimism around refiners. Since then, performance has been very disappointing with shares losing nearly a quarter of their value. As such, it is appropriate to ask if the buy thesis is fundamentally flawed or if this sell-off creates an even greater opportunity....

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